Paychex, Inc. · NASDAQ:PAYX
Paychex — Q2 2015 Earnings Presentation
16 slides from Paychex's earnings presentation, Feb 25, 2015
Slide 1: Second Quarter Highlights and Financial Results Fiscal 2015
Second Quarter Highlights and Financial Results Fiscal 2015 © 2014, PAYCHEX, Inc. All rights reserved.
Slide 2: Forward Looking Statements
Forward Looking Statements You should be aware that certain written and oral statements made by management may constitute “forward-looking statements” within the meaning of the safe-harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements ar
Slide 3: Contents
Contents Company Overview Quarterly Highlights Second Quarter Financial Results Fiscal 2015 Outlook © 2014, PAYCHEX, Inc. All rights reserved. 3
Slide 4: Paychex Overview
Paychex Overview Paychex is a leading provider of integrated payroll, human resource, insurance, and benefits outsourcing solutions for small to mid-sized businesses Market capitalization in excess of $16B Strong financial position with no debt Approximately 580,000 clients at May 31, 2014 © 2
Slide 5: Revenue Source
Revenue Source Small Business Payroll Small business targets businesses with 1-50 employees HRS Mid-Market Payroll 35% Mid-market targets businesses with 50-1,000 employees Growing portfolio of standalone services – time and expense management; applicant tracking; time and labor Payroll Human
Slide 6: Second Quarter 2015 Highlights
Second Quarter 2015 Highlights Results reflected growth and progress against key initiatives Introduced Paychex Flex, an industry-leading solution: cloud-based platform with mobility applications streamlines workforce management through innovative technology and flexible choice of service
Slide 7: Second Quarter 2015 Financial Highlights
Second Quarter 2015 Financial Highlights Total service revenue up 10% Operating income, excluding interest on funds held for clients, increased 9%, with operating margin of 39% Average balances of funds held for clients increased 4% Combined interest on funds held for clients and investment
Slide 8: 2015 Second Quarter Financial Results
2015 Second Quarter Financial Results (In millions, except per share amounts) Three Months Six Months Ended % Ended % November 30, Change November 30, Change 2014 2014 Payroll Service Revenue $ 411.2 4% $ 824.0 4% Human Resource Services Revenue 254.7 21% 498.5 19% Total Service Revenue $ 665.9 10%
Slide 9: Payroll Service Revenue
Payroll Service Revenue (In millions) YTD Full Year 1,599 1,510 1,539 1,405 1,439 791 824 716 754 763 705 2010 2011 2012 2013 2014 2015 % Full Year (5%) 2% 5% 2% 4% Increase % of Service 72% 71% 69% 67% 65% Revenue © 2014, PAYCHEX, Inc. All rights reserved. 9
Slide 10: Human Resource Services Revenue
Human Resource Services Revenue (In millions) YTD Full Year 879 746 676 597 541 499 419 365 333 291 264 2010 2011 2012 2013 2014 2015 % Full Year 3% 10% 13% 10% 18% Increase % of Service 28% 29% 31% 33% 35% Revenue Reflects change to classify certain PEO direct costs as operating expenses rather tha
Slide 11: Investment Portfolios Results Six Months Ended
Investment Portfolios Results Six Months Ended November 30, November 30, 2014 2013 % Change Average Investment Portfolios (in billions): Funds Held for Clients $3.6 $3.5 4% Corporate Investments $0.9 $0.9 2% Average Rate of Return Earned: Funds Held for Clients 1.1% 1.1% Corporate Investments 0.8% 0
Slide 12: Balance Sheet and Cash Flows
Balance Sheet and Cash Flows November 30, 2014 May 31, 2014 Cash & Investments $927.5 $936.8 Debt $0 $0 Return on Equity 35% 35% For the fiscal year-to-date ended: November 30, 2014 November 30, 2013 Free Cash Flow $330.4 $338.3 Dividends Paid $276.2 $255.7 Dividend Coverage Ratio 1.2x 1.3x © 2014,
Slide 13: Fiscal Year 2015 Outlook
Fiscal Year 2015 Outlook Payroll Service Revenue 3% – 5% Human Resource Services Revenue (HRS)* 16% – 19% Total Service Revenue 8% – 10% Net Income 6% – 8% Operating Income, Net of Certain Items, as a Percent of 37% – 38% Service Revenue Effective Income Tax Rate (approximate) 36% – 37% * HRS revenu
Slide 14: Long-Term Capital Strategy
Long-Term Capital Strategy Cash deployment Investment for organic growth Strategic, accretive acquisitions Return cash to shareholders through dividends and stock repurchase Authorization of stock repurchase up to $350 million through May 31, 2017. © 2014, PAYCHEX, Inc. All rights reserved
Slide 15: © 2014, PAYCHEX, Inc. All rights reserved.
© 2014, PAYCHEX, Inc. All rights reserved.
Slide 16: Supplemental Schedule
Supplemental Schedule Quarterly Guidance Growth Rate Ranges Q1 Q2 Q3 Q4 HRS Revenue FY15 16%-19% 20%-23% 16%-18% 13%-15% FY14, adjusted $208 $211 $226 $234 (in millions) FY14, adjusted Operating Expenses $170 $174 $191 $198 (in millions) Operating income, net of certain items, as a % FY15 38%-39% 38